Raiffeisen Bank S.A.

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MIGA issued two guarantees of €26.6 million ($30.5 million) and €16.2 million ($20.1 million) to Raiffeisen Zentralbank Österreich AG (RZB) for its €28 million and €17 million shareholder loans to Raiffeisen Bank S.A. (RBRO) of the Republic of Romania. The guar-antees are for a period of seven years and provide coverage against the risks of transfer restriction and expropriation. In fiscal 2003, MIGA issued a $38 million guarantee to Raiffeisen Bank S.A. for a $40 million shareholder loan to the same project enterprise. The project's expansion efforts have broadened the range and quality of commercial banking services in Romania and have helped lower the costs of financing. The new investments in the bank are expected to help support economic development in Romania in a number of ways. First, the shareholder loans will bolster the bank's capital base, allowing RBRO to increase its medium-term lending, which will support investments in new equipment. Second, RBRO expects that much of its lending (more than 50%) will support local SMEs through a special SME-EBRD line of credit, helping improve their access to loans. Third, the project will continue to invest heavily in training and technology development. Finally, RBRO will bring state-of-the-art technical infrastructure to Romania, including a new operations center, and update key IT capabilities.

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